Which of the following can happen?
a. Prices are rising and the inflation rate is negative but rising.
b. Prices are falling and the inflation rate is positive and falling.
c. Prices are falling and the inflation rate is positive and rising.
d. Prices are rising and the inflation rate is positive but falling.
e. Prices are rising and the inflation rate is negative and falling.
D
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Bananaland produces only bananas and sunscreen and the quantities and prices for 2012 and 2013 are given in the table above. Between 2012 and 2013, which grew more rapidly, nominal GDP or real GDP?
A) Real GDP grew more rapidly. B) Both grew at the same rate. C) Nominal GDP grew more rapidly. D) Because real GDP and nominal GDP use different prices, it is not possible to determine which grew most rapidly. E) More information is needed to determine which grew more rapidly.
It is true that the distribution process carried out by the price system
A. accomplishes the task more efficiently than central planners would. B. favors the rich. C. is superior to other rationing mechanisms because it is able to pay attention to individual consumer preferences. D. All of these responses are true.
Which of the following would cause the price level to fall and output to rise in the short run?
a. an increase in the money supply b. a decrease in the money supply c. an adverse supply shock d. a favorable supply shock
The principle of comparative advantage suggests that governments should pursue free trade because it ______.
a. equitably distributes human capital worldwide b. enables countries to grow their economies through specialization c. prevents poor countries from pursuing technological advances d. reduces pressure on the economies of countries that have few natural resources